The Potential Impact of the Foxconn Factory Audit

There has been a lot of news lately about the working conditions at factories of Apple's major supplier, Foxconn. The Fair Labor Association (FLA) has and taken to improve the working conditions and curb excessive overtime of employees. All of this activity needs to be viewed as something very positive and it should change things at Foxconn very soon.

Hopefully, this incident will bring to light the broader issue of the working conditions in all types of factories across China. To understand its potential impact, I want to explain a bit about the way these companies recruit their workers and how it ultimately leads to employers feeling like they can exploit workers despite the so-called Chinese labor laws.

China is a very big country, which is mostly rural and very poor. For many, working in the fields is the only source of income. Very few have a chance to get an advanced education and embrace good opportunities outside of their home regions. And the farther west you go in China, the worse the conditions still are. I have personally visited two such villages. I've seen the very tough life these people live and witnessed how much they wish they could participate in this new economic upturn.

But recently, because of the school systems and access to TV, they are no longer as isolated as they were under Mao. They can read about and watch what is going on with the economic revival in the big cities in eastern China. Some get a chance to travel to big cities and see first hand how things have gotten better. They return home and tell of the new, more prosperous China that is emerging. The Chinese government knows this and is desperately trying to find ways to bring similar levels prosperity to these areas, too. It fears that if it doesn't, there could be a serious rebellion in the west that could have major ramifications for both the government and the future of China.

So, the government, along with the Chinese factories, will go out to these poor areas and recruit young people to come work for them on their terms. These kids are so anxious to get out of their difficult situations at home that they jump at the chance. Even though they will work for low wages in tough conditions, they still see this way of living as better than at home. They can earn money to spend and save. Actually, most send a serious portion of their weekly earnings back home to support their families. Therefore, they try and earn as much as possible, even if it means working overtime.

As a result of the audit, Foxconn has agreed to bring its factories into compliance with standard FLA and Chinese work hours. This will reduce the amount of overtime available and workers are very upset. Even if their salaries are raised, they want the extra hours to earn as much money as they can, since in reality they don't work just for themselves, but for their families back home as well. My friends in Shenzen, a city in southern China, notice that because of the audits and salary increases, shopkeepers around the factory are raising prices of goods and services to capitalize on these extra earnings.

Every morning, thousands of potential workers line up in hopes of working in these factories, desperate for the jobs and any income they can get to help better themselves and their families. Seeing this, the factory owners know they have almost unlimited access to workers and, in many cases, have exploited them to their gain. Such practices have been going on for decades in China and remind me of the exploitation of workers in China's garment industry. No matter the year, if the factory owners think they can get away with exploiting their workers, they will try.

But the recent spate of news about Foxconn and its audit has the potential to change the working conditions within all factories across China in the near future. For one thing, the Chinese government was displeased with this Foxconn issue and the worldwide scrutiny of its inability to enforce its existing working condition laws. This alone will make the government crack down on factories all over China and, at the very least, ensure they adhere to the existing laws designed to protect their workers.

But the fact that Foxconn will also raise salaries is perhaps the most important result. It could be a driver for raising salaries at other factories because workers will demand equal pay for equal work. It will probably take place first in the tech factories but I am told that it will eventually influence every factory in every industry.

It is very sad that any worker exploitation takes place at all. In hindsight, I am sure Apple realizes it could have perhaps more closely overseen the factories and pushed Foxconn's management to abide by all of the rules. But if there is any silver lining, it is the fact that it happened at the factory of one of the most influential companies in the world. Because of that, it has drawn media attention and major criticisms about the working conditions at Foxconn. Thanks to Apple's high profile, what is done at its factories could have the potential to influence other factories in China in a similar manner. Let's hope that the Chinese government and factory owners go to school on what has happened at Foxconn and bring significant changes to the working conditions and salaries of factory workers throughout all of China.